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Kurdish forces took over production facilities at the Bai Hassan and Kirkuk oilfields near the city of Kirkuk in July.
Ako Rasheed / Reuters

Baghdad threatens to sue as Kurdish oil tanker nears Texas

The US has pressured American companies not to buy oil directly from autonomous Kurdistan; buyer has not been identified

July 25, 20144:00PM ET

A tanker carrying crude oil from Iraqi Kurdistan is just two days away from arriving at a U.S. port, according to ship tracking satellites, despite Washington's long-standing objection to independent oil sales from the autonomous region.

The United Kalavrvta tanker, which left the Turkish port of Ceyhan in June carrying oil delivered via a new Kurdish pipeline, is due to dock in Galveston, Texas, on Saturday, Reuters AIS Live ship tracking shows.

A sale of Kurdish crude oil to a U.S. refinery would infuriate the Iraqi government, which fears the country’s autonomous, relatively secure Kurdish region is poised to declare its independence amid Iraq’s chaotic security and political environment.

Washington, a reluctant backer of embattled Iraqi Prime Minister Nouri al-Maliki, has pressured companies and governments not to buy crude from the Kurdish Regional Government (KRG), but has stopped short of outright banning U.S. firms from buying it.

On Thursday, Carlos Pascual, head of the U.S. State Department's Energy Bureau, told Reuters that there had been no change of policy in Washington towards Kurdish independent oil sales, but he said he hoped the central government and the region could reach an agreement in time.

"We have made people aware that whatever they buy entails certain risks, and we have consistently told them about that," Pascual said after a talk at Washington's Carnegie Endowment. "At some point Baghdad and Erbil (the Kurdish regional capital) have to come to an understanding of how the development and the export of those resources can contribute to Iraq's overall development.”

Without a deal, Pascual said, conflict between the two sides risked becoming "more acute."

The KRG has renewed its push for an independent state amid the latest violence roiling Iraq. Its relationship with Baghdad has deteriorated over what it sees as Maliki’s role in stoking sectarian tensions that the Islamic State and partner Sunni militias have exploited in their astonishing surge.

In June, the KRG took control of the long-disputed oil city of Kirkuk and expanded its territory by more than a third as Iraqi forces fled the insurgent onslaught. They have so far declined to commit their Peshmerga forces to help Baghdad fight the Islamic State.

On Thursday, an official at SOMO, Iraq's central state oil marketer, reiterated that it would sue any company buying Kurdish oil and blacklist them from deals for Iraq's sizeable crude exports.

"Our foreign legal team is watching closely the movement of the vessel and is ready to target any potential buyer regardless of their nationality," an official from Baghdad's state oil marketer SOMO told Reuters, calling the potential sale "illegal."

Trading sources in Texas, New York, London and Geneva have been unable to identify the buyer of the United Kalavrvta tanker's cargo.

The vessel was rounding the Florida panhandle Thursday after navigating through the Bahamas. The ship carries approximately 1 million barrels of crude, which would fetch more than $100 million at international prices.

The first tanker carrying crude from the Kurdish pipeline set sale from Ceyhan in May. Three others have sailed since then, but only one of the four has been delivered so far — into an Israeli port after a ship-to-ship transfer.

The KRG has so far declined to comment on any tanker sales, beyond denying that it sold oil to Israel.

Iraqi Kurdistan began selling its oil independently of the federal government in 2012, trucking first small amounts of condensate through Turkey and then two types of crude oil. At least one tanker of Kurdish crude, the United Leadership, attempted to reach the United States earlier this year, but reversed course south of Portugal.